Friday, August 02, 2013

Copyright Law - Federal Circuit: Reasonable Royalty For Infringing A Sculpture?

Sculpture, Copyright Infringement, Damages, Hypothetical License, Royalties as Damages, Prejudgment Interest

Gaylord v. United States, 678 F.3d 1339 (Federal Circuit May 14, 2012).  Sculptor won judgment against U.S. Postal Service for copyright infringement for issuing postage stamp depicting soldier sculptures installed in Korean War Veterans Memorial.  The Court of Federal Claims awarded sculptor $5,000 in damages and denied prejudgment interest. Sculptor appealed to Federal Circuit.  The Federal Circuit vacated and remanded holding that damages award based only on what Post Office had paid in the past as a license fee was not proper measure of fair market value and that prejudgment interest was available as a matter of law.   The lower court had used a “zone of reasonableness” test for determining the appropriate license fee and accepted the Post Office’s testimony that it had paid from $1,500 to $5,000 in the past as lump sums.  The Federal Circuit found this testimony to be self-serving.  The Federal Circuit looked to reasonable royalties and hypothetical licenses as a more appropriate measure, noting that the Post Office itself re-licensed the infringed images at a royalty of 8% and noted the sculptor’s past history of licensing images at that rate.  The Federal Circuit noted that the lower court erred in only analyzing one side of the negotiating table in determining fair license fees.
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